11/26/2001 @ 5:42PM

FDA Stands Firm On Generics

Pharmaceutical companies spend millions of dollars in legal fights to keep generic versions of their blockbuster drugs off the market. No wonder: Such copycat drugs gnaw away billions of dollars in sales for the giants. But in two recent cases the U.S. Food and Drug Administration was not swayed by big pharma’s attempts to block copycat drugs.

Late Friday, Miami-based
Ivax
said it had received tentative approval to sell generic versions of diabetes drug Glucophage, despite brandmaker
Bristol-Myers Squibb
trying to hold things up with discussions regarding the generic drug’s label. And earlier last week, Fort Lauderdale, Fla.-based
Andrx
won approval to sell a generic version of Prilosec, the
AstraZeneca
ulcer drug that has worldwide sales of some $6 billion per year.

Both generic companies still have to fight huge battles in court with the two drug giants. But it’s good news that the FDA is not another stumbling block. AstraZeneca and Bristol-Myers, after all, had good runs on these drugs–making billions and billions of dollars. Once patents have expired, these companies should not be able to bully smaller generic firms and tie up the creation of generic drugs with regulatory and legal appeals.

Six-month patent extensions are automatically granted to drug companies who study their drugs in children. Knowing this, Bristol-Myers did such a study. Then it went on to argue that, under a law that said the labels on generic drugs must match those on their brand-name counterparts, Ivax shouldn’t receive approval because it hadn’t replicated any of the studies of the drug in children. Still, the FDA’s main requirement for generic drugs is that they be bioequivalent to the brands: That is, the amount of the medicine placed in the bloodstream by the generic drug must be the same–within a statistical margin–to the brand-name product. In any case, only a tiny percentage of Glucophage users are children.

AstraZeneca challenged Andrx’s version of Prilosec by saying that the generic drug wasn’t really equivalent. It also says that extra patents it filed after the original patent on Prilosec should extend its ownership of the drug by several years. This second issue will be decided in a New York City court starting in early December.

It is in the courts that these issues should be settled. It’s important that the FDA does not prevent cheaper generic drugs from getting to market. Drug giants get long periods of exclusivity on their drugs, during which they can set very high prices. A generic company, by contrast, may get a 180-day period as the only maker of a copycat, but then it is sure to see its profit margins evaporate even more as other generic companies come in and commodify them out of existence.

The generic business can be brutal. That’s why generic companies like Andrx,
Barr Labs
, and
Watson Pharmaceuticals
are all on the lookout for patentable drugs of their own.

All big drug companies do not continue to sue ad infinitum to keep products on the market. Robertson Stephens pharmaceuticals analyst Robert Hazlett has on several occasions praised
Eli Lilly
for playing by the rules when it lost several years of protection on its blockbuster, Prozac.

Drug companies, including Bristol-Myers Squibb, have lately been advertising heavily on television and in magazines to improve their image. And they like to refer to the business of developing new drugs as “ethical pharmaceuticals.” It might help, however, if they would try to appear a little less litigious.